Cta Runs Into An Insurance Bind

The Chicago Transit Authority`s insurance for major liability claims has expired, and the CTA has been unable to find a company willing to replace it, officials disclosed Tuesday.

``Right now we are bare,`` said Larry Pianto, the CTA`s chief administrative officer. ``We are continuing to look. What are we going to get? I don`t know yet.``

The expired insurance, which covered the CTA for claims of as much as $50 million per occurrence, was designed to protect the agency against claims that could result from a transit disaster.

Many government units, from park districts to cities, have been plagued in recent months by a shortage of insurance companies willing to write policies covering them and by skyrocketing rates when coverage can be found. Businesses have faced similar difficulties.

Industry experts say the problem stems from high jury awards in accident suits and declining interest rates, which have resulted in dwindling investment income for insurance companies.

Four companies that had been insuring the CTA declined to renew when their policies expired Saturday. A search for new coverage has been underway for a month, but 14 companies have turned down the business, Pianto said.

Even if a willing company is found, the cost may be too much, he said. The authority paid $452,500 in premiums for the year ending Saturday, but it is believed that comparable coverage for the coming 12 months could range from $2.5 million to $4.5 million.

Under the policies that expired, the CTA had to pay the first $2.5 million in claims for each bus accident and the first $5 million for each rail accident. If those deductibles were increased and premiums rose sharply, Pianto said, CTA officials would have to determine whether it would be better to buy the policy or cover possible losses itself.

The CTA was self-insured in the past when insurance rates skyrocketed, including 1960 through 1965 and 1979 through 1982, and Pianto said market conditions may force the authority back to self-coverage.

The high deductibles in the expired policies meant that the CTA, in effect, was self-insured against smaller claims all along.

Companies insuring the CTA had not been faced with a claim since the 1977 crash of two trains on the Loop elevated structure, Pianto said. That accident killed 11 people and injured 266.

This year the CTA has budgeted $15.5 million in reserves for liability claims and has told the Regional Transportation Authority that it wants to budget $19.1 million for 1986 because experts believe the reserve account is

``significantly underfunded.``

So far this year the CTA has paid $5.2 million in claims and spent $3.4 million to handle and process them, Pianto said. The figures for 1983 were $7.1 million and $5 million, respectively, and for 1984, $6.5 million and $5.9 million.

Last week RTA Chairman Samuel Skinner announced the formation of a task force to look at ways to reduce insurance costs for the CTA and the RTA`s other two operating subsidiaries. Those are the commuter rail system, Metra, and the suburban bus system, Pace.

Skinner was out of town Tuesday and unavailable for comment, but Edward Murnane, RTA director of internal affairs, said: ``I think the situation at the CTA underscores a problem that the other agencies face as well. The whole question of insurance is something that has just ballooned within the last month and a half or two as the RTA (1986) budget process has gotten underway.``

The RTA staff originally assumed a 4.2 percent increase in Metra insurance premiums next year, Murnane said, only to find that the rail agency predicted a minimum increase of 270 percent. Pace officials have said they believe their 1985 insurance premium of $377,500 could triple or quadruple in 1986.